Troubled high street retailer New Look has slumped to a £234m annual loss but says its turnaround is on track as it seeks to switch focus from edgy fashion to offer basic cheaper clothes.
New Look’s results also showed an 11.7% fall in UK sales, underlining the difficulties facing the business after it earlier this year agreed a rescue plan with creditors that will see 60 stores close.
The figures for the year to 24 March showed that losses widened compared to the year before when the business was in the red by £17m.
Executive chairman Alistair McGeorge said the period had been “undoubtedly very difficult” and that conditions would remain tough in the year ahead.
But he added that turnaround plans were now well underway and it was “seeing green shoots emerge”.
The company said it was making “significant progress” to restore its fortunes as it seeks to return to “value-led fast fashion and wardrobe basics” and slashes prices – with 80% of products now retailing for less than £20.
The cost of clearing out old stock purchased under an attempt to pursue a previous “younger and edgier” direction were among the factors pushing it into the red.
One-off costs linked to its Company Voluntary Arrangement (CVA) – the plan which will see some stores close and others have rent bills slashed – also contributed to the widening losses.
The CVA is expected to cut costs by £40m a year.
In addition, the company was hit by the cost of an abortive head office relocation plan and a writedown in the value of its assets triggered by its struggling performance.
The results also showed a 19.2% fall in website sales.
The figures contrasted sharply with the latest trading update from online rival Boohoo – which also operates the Pretty Little Thing and Nasty Gal brands – where sales were up 53% including a 49% upturn in the UK in the three months to 31 May.
The update comes after House of Fraser, another struggling high street stalwart, last week proposed a CVA which will see 31 out of 59 stores close.
Mothercare and Carpetright have also announced similar store closure plans.